Letters to the Editor

CPF officers explain fund’s purpose

Dear Editor:

As the chair and vice-chair of the Virginia State Bar’s Clients’ Protection Fund, we write in response to the letter submitted by fellow VSB attorney H. Watkins Ellerson in the April 17 edition of Virginia Lawyers Weekly (“Lawyer Objects to Mandatory Liability Coverage,” 20 VLW 1383). In his letter, Mr. Ellerson expressed his opposition to mandatory malpractice insurance. In doing so, he asked, “To what extent has VSB Clients’ Protection Fund paid out monies for the misconduct or malpractice of uninsured lawyers?” The simple answer is that the CPF does not make any payments for the malpractice of lawyers, insured or not.

The Clients’ Protection Fund provides an important mechanism to provide some form of recompense for losses caused by the infrequent dishonest attorney, but it does not serve as a form of insurance for malpractice or other attorney negligence. The CPF Board makes monetary awards to persons who have suffered out-of-pocket financial losses because of dishonest conduct by Virginia lawyers. The fund is a remedy of last resort for clients who suffer dishonest conduct at the hands of a lawyer and yet are not able either to obtain reimbursement of their direct payments to that lawyer, or to obtain reimbursements of client money held by the lawyer but not paid to the client.

In a typical petition, a former client will allege that she paid a “retainer” to an attorney whose license to practice law has been subsequently suspended or revoked. The client will allege that the suspended lawyer failed to do any work pursuant to the “retainer” and failed to return the unused money to the client. The client may petition the CPF for an award equal to the unearned “retainer,” but not for any loss caused by the attorney’s mishandling of the case.

A lawyer’s negligence only gives rise to a claim entitled to payment under the rules of the fund if that negligent act is “dishonest conduct” which may include, but is not necessarily limited to, theft, conversion, embezzlement or withholding of money or property, or a failure or refusal to refund unearned fees received in advance if the lawyer performed no legal services or such an insignificant service that the failure, refusal or inability to refund the unearned fees constitutes a wrongful taking or conversion. Consequently, money awarded to petitioners is limited to the actual loss suffered by the client in the form of monies paid and is not an assessment of “tort” damages or of attorney malpractice.

The Clients’ Protection Fund Board is comprised of 14 volunteer members, including the undersigned, and is supported by full time members of the VSB staff. The fund paid almost $300,000 for 86 allowed claims during the 2005 fiscal year alone, and has been paying claims since its inception in 1976. Information on claims, and the payment of them, is regularly published in the Virginia Register.

Stephen K. Gallagher

Chair, Clients’ Protection Fund Board

Alexandria

John Tarley, Jr.

Vice Chair, Clients’ Protection Fund Board

Williamsburg

Ellerson responds to Mason

Dear Editor:

Darrell Tillar Mason’s letter (“VSB insurance chair responds to lawyer’s criticism,” May 1) touting the benefits of professional liability insurance is duly noted. I have no dispute with those claims.

She attempts, however, to implicitly justify charging lawyers an “uninsured practitioner’s fee” by reciting the undocumented assertion that the “general public” (with which she is undoubtedly in close communication, unlike myself) assumes we lawyers are all insured, as if that alone were sufficient reason to compel all self-insured lawyers to pony up a hefty nick to the Clients’ Protection Fund (also enthusiastically touted) for being self-insured. I am grateful for her commendation to me of the online Annual Report thereabout, which implicitly contains the answers to all the questions I raised earlier. If not, then I shall have wasted my time pawing through the Web. I think I shall pass.

Nowhere does Darrel Tillar Mason address my basic point earlier made, that those who advocate the imposition of yet another fee for the august privilege of practicing law have yet to spell out exactly how much the uninsured lawyers are costing clients, compared with insured lawyers and government lawyers. That is the sole issue I raised, despite the obfuscations flapped about by Darrel Tillar Mason.

Does Darrel Tillar Mason pay her own liability policy costs? Has she ever had a totally unfounded claim that, nevertheless, resulted in a premium increase? Well, I did and I have, on both counts, and that is why I don’t bother to pay the insurance companies anymore, and that is why I won’t pay for Darrel Tillar Mason’s newest bright idea to whack us with another assessment to stay in this less-than-compelling game because it gives folks like Darrel Tillar Mason a warm, fuzzy feeling that something is being done to pacify the rampant fears of the “general public.”

I am still waiting for some facts..

H. Watkins Ellerson

Hadensville

P.S. — One further point to make regarding Darrel Tillar Mason’s response to me:

She correctly points out that malpractice insurance does not cover dishonest behavior, which is covered by the Clients’ Protection Fund.

How, then, does forcing us self-insureds to pay into that fund compensate for our refusal to carry malpractice insurance?

Are we that much more likely to be dishonest? That is certainly an interesting, novel construct.